Hsu calls for new liquidity standards for midsize, large banks

Acting Comptroller of the Currency Michael Hsu called for new regulations that would require midsize and large banks to have sufficient liquidity to cover stress outflows over a five-day period.

Details: Citing last year’s rapid deposit runs at Silicon Valley Bank and Signature Bank of New York, Hsu said the new standards should consider the potential speed and severity of uninsured deposit outflows and the liquidity value of pre-positioned discount window collateral as well as reserves. Speaking at the Columbia University Law School, Hsu said the change would help destigmatize the use of the discount window.

More: More broadly, Hsu said banks may need to further enhance their liquidity risk management capabilities to keep up with the industry’s transition towards a faster payments system and possibly tokenization of real-world assets and liabilities.